Are the Americans finally coming to their senses on NAFTA?

The average temperature in Montreal in late January is -9C, or 16F to our metrically-challenged American friends. The seasonal low is -14C, or 7F.

The NAFTA talks have been dominated to date by the obnoxious behaviour of the American side — the strident demands for concessions without recompense, the threats, the whining in the media. The Trudeau government says it’s holding the next round of talks in frigid Montreal in late January to showcase the city as a cosmopolitan francophone metropolis and an international trading hub. But maybe there’s a subtle signal being sent here — This will all go a lot better if you guys stop acting like jerks.

The talks have been going so poorly that a planned mid-December round six in Washington was quietly dropped at the end of the last round in Mexico. The one promising development to date is the fact that the three national representatives — Foreign Affairs Minister Chrystia Freeland, U.S. Trade Representative Robert Lighthizer and Mexican Economy Minister Ildefonso Guajardo — skipped the wrap-on the last day, on the feeble pretext that they had met on the margins of the Asia Pacific summit in Vietnam. Yeah, right.

That no-show pre-empted the usual posturing on all sides, and allowed the negotiating teams at more than two dozen sectoral tables to get down to work. This is how the Canada-U.S. Free Trade Agreement and NAFTA were negotiated in 1986-87 and 1991-92 — out of the glare of the media spotlight. (Of course, that was before the Internet, smartphones and social media, so the pressure may have been less intense.)

Despite the appearance of a deadlock, the professionals at the table apparently have been making good progress on such issues as internet commerce, telecom and financial services. One of the basic patterns of trade talks is that negotiators make the easy deals first, leaving the potential deal-breakers to the end — in the hopes that momentum can help carry the day.

The Americans can call the dispute settlement mechanism whatever they want, if it makes them happy. As long as it’s independent.

And yet there remain among the Americans’ demands five ‘non-starters’ for Canada:

A major change to rules of origin in the automotive sector — Team Trump is demanding 50 per cent U.S. content and 85 per cent North American content, as opposed to the current 62.5 per cent continental content rule.

U.S. access to government procurement at all levels in Canada and Mexico, without reciprocity.

An end to supply management in dairy, eggs and poultry in Canada.

A five-year “sunset clause” for a renewed deal.

An end to current independent dispute settlement mechanisms, notably Chapter 19, which has tended to favour Canada on issues such as softwood lumber.

These aren’t just temporary roadblocks. As long as they’re on the table, there may not be a path to a deal.

For example, on government procurement, the USTR’s November update of its Summary of Objectives for the NAFTA renegotiation says Washington’s plans for NAFTA would “exclude sub-federal coverage (state and local governments) from the commitments being negotiated … (and) keep in place domestic programs such as ‘Buy American’ requirements on federal assistance to state and local projects, transportation services, food assistance and farm support, and key Department of Defense Procurement.”

No mention of reciprocity. The only sensible answer to such petulance should be to tell Trump’s people to shove it.

On the other hand, while Commerce Secretary Wilbur Ross stupidly proposed a five-year sunset clause on NAFTA, Lighthizer’s office is now suggesting a “general provision” that would “provide a mechanism for ensuring that the parties assess the benefits of the agreement on a periodic basis.”

Which is … something completely different from what Ross pitched. It’s totally sensible and negotiable. It’s also more or less what we’re doing already. (And it’s probably Lighthizer telling Ross to keep his mitts off the damn file.)

Even on dispute settlement, the USTR update is not unreasonable in that it proposes to “establish a dispute settlement mechanism that is effective, timely, and in which panel determinations are based on the provisions of the Agreement and the provisions of the parties are provided in a reasoned manner.”

Canada would be okay with that. The deal-breaker for Prime Minister Justin Trudeau now — as it was for Prime Minister Brian Mulroney 30 years ago — would be any suggestion of forcing us to litigate our trade disputes in American courts. (On softwood, for example, we’ve won every case under Chapter 19, even though lumber wasn’t part of the FTA or NAFTA.) The Americans can call the dispute settlement mechanism whatever they want, if it makes them happy. As long as it’s independent.

And on supply management, the U.S. is asking for a 10-year phase-out for dairy, eggs and poultry. The Americans already enjoy a $400 million surplus in dairy trade with Canada, but set that aside for a moment. Supply management could be phased out on such a timeline, with government support. We managed the transition in the Canadian wine industry after the Canada-U.S. FTA opened it up. Decades of Cold Duck gave way to a world-class Canadian wine industry as a result.

So, there’s room to negotiate, even on deal-breakers. But for progress to be made, the Americans have to bring something to Montreal apart from thermal underwear — something we like to call le gros bon sens and the Americans might recognize as a grasp of reality.

The views, opinions and positions expressed by all iPolitics columnists and contributors are the author’s alone. They do not inherently or expressly reflect the views, opinions and/or positions of iPolitics.

More from iPolitics

X

Join the conversation. It gets feisty!

Author

L. Ian MacDonald is editor of Policy, the bi-monthly magazine of Canadian politics and public policy. He is the author of six books. He served as chief speechwriter to Prime Minister Brian Mulroney from 1985-88, and later as head of the public affairs division of the Canadian Embassy in Washington from 1992-94.